Operator News
Cambodia – Donaco wins legal round against former Star Vegas owner but battle continues
By Phil - 14 November 2019
Australian-listed Donaco International has won a ruling by the Appeal Court in Phnom Penh, Cambodia against the former Thai of the Star Vegas business who it says has conducted a campaign of legal harassment against the company in Cambodia.
Donaco has initiated a series of lawsuits against Thai businessman Somboon Sukcharoenkraisri, the man who it bought Cambodian casino StarVegas off, claiming that he has breached non-compete disclosure, ‘poached’ VIP junkets and staff and threatened its player base.
It had also frozen over $10m worth of Donaco shares held by the Thai vendors of the Star Vegas casino business. In retaliation, Mr. Sukcharoenkraisri has tried to terminate Donaco’s lease on the Star Vegas land. He has threatened to build a wall around the casino and cut off electricity to part of the venue by taking one of its transformers.
Ben Reichel Executive Director at Donaco said: “The Thai vendor has made two attempts in lower courts to seize various assets of the Star Vegas business, purportedly as security for the vendor’s claim for the FY17 management fee. This includes attempts to freeze the Cambodian bank account of the Star Vegas business. Both of these attempts to seize assets were rejected by the lower courts, on 6 July 2018 and 10 January 2019. The Thai vendor appealed the second ruling to the Appeal Court in Phnom Penh. The Appeal Court has now ruled in Donaco’s favour, and once again rejected the vendor’s claims. There is no further appeal in this matter. The Appeal Court is the same court that will rule, in due course, on the Company’s appeal against the Cambodian lease arbitration decision. In that matter, a further appeal will be available to the Supreme Court in Cambodia. The company’s claim against the Thai vendor in the Singapore arbitration hearing is set to resume on November 25 2019.”
The news was blighted slightly by an announcement from Australia’s Takeovers Panel who rejected a claim from Donaco claiming that the Thai businessman trying behind the scenes to shape the membership of the Donaco board.
Takeovers Panel said: “Donaco did not provide a sufficient body of material to justify the panel making further enquiries. The panel concluded there was no reasonable prospect that it would make a declaration of unacceptable circumstances.”
The long-running legal battle has alleged that Mr. Sukcharoenkraisri set up new casinos and ‘poached’ four key VIP junkets Star Vegas’s VIP junkets, along with many of Star Vegas’ staff and threatened players that they would not be safe unless they played at a rival casino.
Donaco claims that intruders came into StarVegas, shutting down all the slot machines before making an announcement over the Public Address system within the casino that Star Vegas was closing and all players would need to relocate to the Star Paradise, the new casino next door.
Mr. Reichel said: “We did a deal with the wrong person. We are focusing very intently on dealing with the issues ahead of us.”
Revenues in the three months to September 30 showed ‘a very strong improvement’ from the prior-year period with EBITDA up by almost 167 per cent to AUD8.91m (US$6.09m).
Donaco stated: “The strong increase in EBITDA was driven by higher revenues and tighter cost control across the group. The increase in revenues is pleasing given that the September quarter is traditionally not a particularly busy quarter for either of the company’s casino properties.”
GGR at Star Vegas increased by three per cent year-on-year in the third quarter with EBITDA up by seven per cent.
Donaco said that a new management team at Star Vegas ‘began rationalising the VIP junket arrangements, with a focus on eliminating poor quality business practices, and improving margins’
“While VIP turnover declined due to the departure of unprofitable junkets, net revenue increased. This was partially due to an improved win rate, which in turn is partially attributable to better operating procedures,” the company stated.
